According to an announcement from the Bank of Canada on Friday, Canada has completed a pilot program testing the utilize of distributed ledger technology in bond markets, which culminated in the issuance of the country’s first tokenized bond.
The experiment, known as Project Samara, involved the Bank of Canada, Export Development Canada, Royal Bank of Canada and TD Bank Group and examined whether blockchain infrastructure could improve bond issuance, trading and settlement.
Within pilotExport Development Canada issued a C$100 million ($73.6 million) bond with a maturity of less than three months to a closed group of investors. The security was issued, traded and settled on a distributed ledger platform, and payments were processed using wholesale central bank deposits rather than commercial bank money.
Built on Hyperledger Fabric, the platform enables participants to manage the full security lifecycle, including issuance, bidding, coupon payments, redemption and secondary trading, while integrating separate ledgers for cash and bonds to enable near-instant settlement.
The pilot highlighted the trade-offs associated with implementing distributed ledger systems in capital markets. Participants reported improvements in operations and data integrity, but also identified challenges in governance, regulation and integration.
The researchers said the results showed that distributed ledger systems can improve settlement efficiency and reduce counterparty risk, although wider adoption may be slowed by infrastructure and regulatory hurdles.
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Tokenized bonds are gaining popularity among governments and banks
The Canadian pilot program adds to a growing list of experiments by governments and financial institutions that are exploring how blockchain-based systems could reshape the issuance and settlement of time-honored financial assets.
An early example occurred in 2018, when the World Bank issued a two-year, A$110 million “Bond-i” debt facility arranged by the Commonwealth Bank of Australia. The issue is widely considered to be the first bond whose creation, allocation and lifecycle management were recorded on the blockchain.
In 2022, the Monetary Authority of Singapore launched Project Guardian to explore how distributed ledger technology could be used in wholesale financial markets. Early industry pilots examined decentralized finance applications for borrowing and lending tokenized bonds and deposits on public blockchains.
In 2023, Hong Kong issued a tokenized green bond using a distributed ledger infrastructure, with the issuance facilitated by the Hong Kong Monetary Authority. The program has been expanded to include additional digital bond offerings in 2024 and 2025.
The World Bank has issued a digital Swiss franc bond on the SIX Digital Exchange in 2024 with settlement in the wholesale central bank digital currency provided by the Swiss National Bank.
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